FTO.L Regulatory News (FTO)

27 Sep 2005 07:15

Fortune Oil PLC27 September 2005 27 SEPTEMBER 2005 FORTUNE OIL PLC ("Fortune Oil" or "the Company") Announcement of Interim Results for 6 Months Ended 30 June 2005 Fortune Oil invests in and manages oil and gas infrastructure projects in China.Fortune Oil is quoted on the full list of the London Stock Exchange and has itsheadquarters in Hong Kong. KEY POINTS * Turnover including share of joint ventures increased by 10 per cent to £64.2 million (2004: £58.5 million). * Profit before tax increased by 4 per cent to £3.2 million (2004: £3.0 million restated). * Earnings per share unchanged at 0.08p. * Replacement Single Point Mooring buoy successfully installed at Maoming. * 10 per cent increase in contribution by Bluesky Aviation Refuelling. * New CNG station commissioned in Beijing. Bruce McGowan, Executive Vice Chairman of Fortune Oil, commented: "Despite a modest slowdown in the rate of growth in Chinese energyconsumption, Fortune's oil operating companies continued to perform well and theCompany made sound progress in the pursuit of potential new investments. Giventhe projected long-term development of the Chinese economy and our strong marketposition, we continue to be confident of our future growth." ENQUIRIES: Fortune Oil PLCBruce McGowan - Executive Vice Chairman Tel: 020 7824 8411 (UK)John Pexton - Deputy Chief Executive Tel: + 852 2583 3113 (Hong Kong) ICIS Limited Tel: 020 7651 8688Archie Berens or 07802 442 486 FORTUNE OIL PLC Announcement of Interim Results for 6 Months Ended 30 June 2005 Chief executive's review INTRODUCTION Fortune Oil's turnover and net profit showed a modest increase in the first halfof 2005. The rate of growth in China's energy consumption slowed down after theunprecedented demand surge in the previous year. This was the result ofgovernment demand-side policies, higher oil prices and short term infrastructureconstraints in natural gas supply. We expect the gas supply issues aroundBeijing to be resolved in the second half of the year. Results for the six months ending 30 June 2005: •Revenues including the Group's share of joint ventures increased to £64.2 million, up 10 per cent from the same period last year (2004: £58.5 million). •Retained profits (attributable to equity shareholders) increased to £1.4 million from £1.2 million in the same period last year, with earnings per share steady at 0.08 pence. •The Bluesky Aviation Refuelling business achieved a 10 per cent increase in net profit due to higher sales volumes. •We successfully commissioned the Tongzhou CNG station in Beijing, although insufficient gas supply hindered the natural gas business in the first half of the year. •A replacement Single Point Mooring buoy was installed and successfully commissioned at Maoming. REVIEW OF OPERATIONS Oil Infrastructure Throughput at the Maoming Single Point Mooring (SPM) was 5.2 million tonnes ofcrude oil from 22 tankers in the first half of 2005. Throughput was lower thanin the same period last year (5.4 million tonnes from 25 tankers) because of the24 days down-time required to replace the buoy. However operating profit at theMKM joint venture was unchanged at £3.0 million (US$5.6 million). The MKM joint venture continues to have an accident-free record with no spillageof oil from the facility. The water depth allows discharge of the normal rangeof Very Large Crude Carriers (VLCC's), up to 280,000 dwt. Consequently, thecapacity of the SPM is limited by the time taken to discharge the VLCC's, thescheduling of vessel arrivals and the sea conditions. The new SPM buoy is betterdesigned for the sea conditions near Maoming, which should result in overallefficiency gains and reduced maintenance costs over its ten-year life. The South China Bluesky Aviation Refuelling joint venture increased sales volumeto airlines by 14 per cent to 591,000 tonnes (2004: 517,000 tonnes). Operatingprofit rose by 11 per cent to £4.2 million (US$7.8 million), compared with £3.8million (US$6.9 million) in the same period last year. There were no lost-timeaccidents. All domestic flights were supplied with jet fuel from domesticrefineries. The increase in jet fuel demand at Bluesky occurred in spite of higherinternational and domestic jet fuel prices. The sales of jet fuel forinternational flights doubled to 12 per cent of total revenue in the first sixmonths of 2005, principally due to increasing long-haul connections at Guangzhou; this helps to augment operating margin as refuelling margins forinternational flights are generally higher than those for domestic ones. Thegovernment is currently reviewing the tariff arrangements but the plans forindustry deregulation and tariff adjustment are not yet certain. Expansion plans are being accelerated at Bluesky's largest airports (Guangzhou,Changsha, Wuhan and Zhengzhou) in order to meet the growing passenger demand.New refuelling facilities will also be required when the airport in Shantou isrelocated. The Bluesky investments for these expansions will be financed bylocal bank debt. Refuelling services for cargo operations are also expected tobe a significant element of Bluesky's future revenues. In addition to domesticcargo flights, the international traffic will increase substantially in 2008when Federal Express opens its new Asia-Pacific hub at Guangzhou airport. The West Zhuhai Oil Products Terminal joint venture increased throughput by 18per cent to 1.3 million tonnes (2004: 1.1 million tonnes). The joint venture'snet profit increased by 27 per cent to £1.4 million (US$2.6 million) from £1.1million (US$2.0 million) in the same period last year, although throughput hasrecently slowed because of product supply disruptions in Guangdong. Currentlyall throughput is on behalf of PetroChina and Fortune Oil has instigated areview of procedures to ensure that the operations and administration canservice other customers as part of a Phase III expansion. The Zhanjiang Fu Duo LPG facility achieved the same small level of profit in thefirst half of 2005 as in the previous year. There was a significant reduction intotal LPG sales to 20,000 tonnes (2004: 34,000 tonnes) due to sustained weaknessin LPG retail margins. Gas Infrastructure In early 2005 there was insufficient gas supply to meet demand in and aroundBeijing. The winter this year was particularly cold, resulting in a sharp risein demand per user, and the number of users had increased significantly becauseof the attractiveness of gas as a fuel. As a result total demand in Beijingexceeded planned supply and the volume of gas available to Fu Hua, our naturalgas subsidiary, was curtailed. Consequently, our recently acquired joint venturein Huairou supplied piped LPG at a net loss in place of piped natural gas. Wecontinued to meet existing customer requirements in order to preserve thelong-term business franchise. As a result the total gas sales increased only marginally to 11 million cubicmetres (2004: 10 million cubic metres). The number of new contracted connectionswas 6,600, lower than expected because of concerns over future gas supplies.After accounting for overheads the natural gas business made a net loss of £0.2million (US$0.4 million). The temporary problems in the Beijing gas supply havedeferred our revenue and growth plans by six months and we now expect thebusiness to be earnings positive in early 2006. Fu Hua has successfully commissioned the Tongzhou CNG station, one of thelargest facilities for supply of Compressed Natural Gas to the Beijing suburbs.This is located at the terminus of the second Shaanxi-Beijing pipeline. Weexpect sales of high pressure CNG to reach 150,000 cubic metres per day in thenear future and we also intend to develop a medium pressure CNG business. We remain positive about the prospects for our gas supply business. The secondShaanxi-Beijing trunk pipeline has been completed and henceforth sales will bedriven by gas field developments in western China and the time taken forconfidence to return to the gas consumer market. The Fu Hua subsidiary has aquota for sales of gas in the second half of 2005 and gas supplies are expectedto be sufficient to meet most of the higher demand projected for 2006. Thegovernment has a long term intention of gradually increasing gas prices and weare likely to see higher city gate prices by 2006; we expect to be able to passon these price increases as natural gas prices remain significantly below thoseof alternative fuels such as LPG and diesel. Trading and Retail Operations Trading and retail operations made a small profit in the first half of 2005.Sales volume at the gasoline stations increased 13 per cent and, in contrast tomany private operators, we were able to secure supplies for all our demand.However the controlled pricing regime resulted in a narrower retail margin. FINANCIAL REVIEW The results for the Group for the first half of 2005 and comparative periodshave been restated in accordance with International Financial ReportingStandards (IFRS). The Directors consider that MKM should continue to be recordedas a subsidiary under the requirements of IFRS in the Interim Results. Theimpact of new standards on the Group was modest and primarily relates torestatement of goodwill. Details are provided in Note 2 and Note 6 respectively. Revenues including the Group's share of joint ventures in the first six monthsof 2005 increased to £64.2 million (US$120.2 million) (2004: £58.5 million,US$106.7 million). Profit before taxation was £3.2 million (US$5.9 million), anincrease of 4 per cent over the previous year (£3.0 million, US$5.5 million).There has been continuous growth in all the Group's businesses except fornatural gas, which made a small loss due to constraints in supply. Earnings pershare remained unchanged due to the issue of new shares last year. Proceeds from share issue in December 2004 were used for investment in theTongzhou CNG station and trucks, and for the acquisition of a natural gas jointventure in Huairou, totaling £5.3 million (US$10.0 million). In addition,capital expenditure of £2 million (US$3.7 million) was incurred for the new SPMbuoy. Trade and other receivables increased to £8.1 million (US$14.4 million),the increase being £0.8 million (US$1.4 million) in respect of the natural gasbusiness and £1.3 million (US$2.3 million) in respect of MKM, a temporaryincrease which was subsequently rectified. The Group had no net debt as at 30 June 2005. The net cash position was £4.7million (US$8.5 million) but this was prior to payment of dividend to minorityshareholders in MKM (£3.0 million, US$5.3 million). Net cash provided byoperating activities was £417,000 (2004: £1.7 million), being affected by thehigher account receivables in MKM (£1.3 million). Interest expenses for theperiod was lower at £232,000 (US$434,000), compared with £299,000 (US$545,000)in the previous year, reflecting the lower loan balances. Corporate Governance In recent months Fortune Oil management has made strides to follow the revisionsto the UK codes on corporate governance. This has included the purchase ofDirectors and Officers Insurance, implementation of a formal whistle blowingpolicy and implementation of new disclosure policies. Mr. Trevor Bedford, ourSenior Independent Director, exercised all his share options and now meets theCombined Code guidelines on independence. Mr. Wang Jin Jun, an IndependentNon-Executive Director, has been appointed Chairman of the RemunerationCommittee such that this committee now has at least one independent member. Wewill continue to make further enhancements to our governance and reportingprocedures. PROSPECTS Although growth in demand has slowed and infrastructure bottlenecks havehindered gas sales, the prospects for our energy supply business remain strong.High oil prices could create supply and pricing problems in the short term butthe China economy should continue its upward trend. We still anticipateconsiderable growth in demand for natural gas and transportation fuels over themedium and long term. Fortune Oil's franchise and reputation give us a uniqueposition for participation in this future growth and we have a strong projectdevelopment portfolio. Li ChingChief Executive27 September 2005 China review China's apparent demand for crude oil grew by 4 per cent to 150 million tonnesin the first half of 2005, compared to a 22 per cent increase in the yearbefore. Imports of crude oil also increased by 4 per cent, while total importsof refined products actually decreased 18 per cent, according to the NationalBureau of Statistics. This slow-down in import growth follows the huge step upin imports seen in 2004 and the associated inventory build-up. It also reflectsthe general slow-down in domestic consumption due to the tight monetary measuresimposed by the government. Inflation remains low at 2 per cent but GDP is stillgrowing strongly at 9 per cent on the back of surging manufacturing exports. Theresultant increasing trade surplus should increase pressure for further upwardrevaluations of the RMB following the 2 per cent revaluation in July. Sustained high oil prices are beginning to have an effect on the China energymarkets. Like most countries in Asia, China has continued a policy of limitingthe domestic ex-refinery prices so as to protect users, particularly farmers andpublic transportation, from soaring international oil prices. The main loser hasbeen the oil refining industry, which lost RMB 4.2 billion (US$0.52 billion) inthe first half of 2005, as reported to Interfax by the National Bureau ofStatistics. The oil refineries in China continue to run at full capacity andsignificant investment is planned in the refining sector to meet long termdemand growth. For the next few years Deutsche Bank forecasts incrementalcapacity of 400,000 barrels per day (5 per cent growth) each year in China'srefining capacity, still insufficient to meet demand growth in the near term. Over the past few months there have been shortages of gasoline and diesel atretail stations in Guangdong and other provinces, blamed both on the shortage oflocal supply and the current high prices of imported fuels. The authorities haveimplemented measures to restrict exports of gasoline and are now considering afuel tax so as to encourage energy conservation. The price of jet fuel sold byrefuellers such as Bluesky for domestic flights is also based on the controlledex-refinery price, significantly below international prices, but so far thisyear Bluesky has been able to source all these supplies from local refineriesrather than imports. China continues to tackle the problem of power supply. Production of electricitycontinues to grow at 15 per cent per year and the China Electricity Councilpredicts that supply will exceed demand by 2007 with an annual increase incapacity of up to 70 Gigawatts (GW), similar to the UK's total installedcapacity of 73 GW. Most of this additional power capacity will be coal-fired,although a few gas-fired power plants should be commissioned using supplies fromthe West-East Pipeline and Guangdong LNG. The gas supply industry is also coming to terms with the need to move pricescloser to international levels. The NDRC (National Development and ReformCommission), which is responsible for energy policy, has stated a desire toincrease well-head prices by approximately 0.2 RMB/cubic metre. This will havethe effect of increasing gas prices by 10 to 20 per cent along the gas chain,but the domestic gas supply price will remain lower than that of imported LNG.The higher well-head prices should encourage the development of more domesticgas reserves, such as coal-bed methane (CBM). China has one of the world'slargest reserves of CBM and, in contrast to the petroleum gas sector, foreigninvestment is encouraged in CBM development; to date the reserves have not beenproperly exploited, largely because of low well-head prices and the lack ofpipeline infrastructure. The higher end-user prices for natural gas will help control the burgeoningdemand; but it should not hinder industry development as affordability is strongand the lack of infrastructure remains the principal limit. Total gasconsumption is still expected to grow significantly; the forecast by CNPC, theprincipal supplier of natural gas, is that annual consumption will rise from 40to 110 billion cubic metres from 2004 to 2010. Most of the natural gasinfrastructure, namely trunk pipelines and LNG receiving terminals, are beingdesigned to supply China's eastern coast. Coal will still be the dominant fuelin most parts of the country but environmental and safety concerns will continueto encourage the development of gas as a premium fuel. FORTUNE OIL PLC Announcement of Interim Results for 6 Months Ended 30 June 2005 GROUP INCOME STATEMENT Restated in Restated in IFRS IFRSAmount in £'000 6 months ended 6 months ended 12 months ended 30.6.05 30.6.04 31.12.04 (Unaudited) (Unaudited) (Audited) --------- --------- ------------ Revenueincluding shareof jointventures 64,180 58,539 118,088 Share of revenueof jointventures (40,547) (34,237) (73,319)-------------------------- --------- --------- ------------ Group revenue 23,633 24,302 44,769Cost of sales (19,204) (20,092) (36,775)-------------------------- --------- --------- ------------Gross profit 4,429 4,210 7,994-------------------------- --------- --------- ------------Exceptionalitems - - 801 Administrativeexpenses (2,454) (2,102) (3,809)-------------------------- --------- --------- ------------Group operatingprofit 1,975 2,108 4,986 Share of resultsof joint ventures 1,336 1,210 1,970 -------------------------- --------- --------- ------------ Profit fromoperations 3,311 3,318 6,956 Interest payable (232) (299) (421) Interest receivable 87 30 109-------------------------- --------- --------- ------------ Profit before taxation 3,166 3,049 6,644 Taxation (267) (284) (423)-------------------------- --------- --------- ------------ Profit for the period 2,899 2,765 6,221-------------------------- --------- --------- ------------Attributable toEquityshareholders 1,350 1,180 2,631 Minorityinterests 1,549 1,585 3,590-------------------------- --------- --------- ------------ 2,899 2,765 6,221-------------------------- --------- --------- ------------Earnings per shareProfit attributable to ordinaryshareholdersBasic 0.08p 0.08p 0.17pDiluted 0.08p 0.08p 0.17p-------------------------- --------- --------- ------------ FORTUNE OIL PLC Announcement of Interim Results for 6 Months Ended 30 June 2005 GROUP BALANCE SHEET Restated in Restated in IFRS IFRS 6 months 6 months 12 months ended ended ended 30.6.05 30.6.04 31.12.04Amount in £'000 (Unaudited) (Unaudited) (Audited)---------------------- --------- --------- ---------AssetsNon-current assetsProperty, plant and equipment 25,674 17,951 18,143Goodwill 1,037 1,019 968Other intangible assets 1,076 1,041 947Investments in joint ventures 16,616 18,024 16,908Other investment 130 127 121Other receivable 2,219 3,159 2,279---------------------- --------- --------- --------- 46,752 41,321 39,366 --------- --------- ---------Current assetsInventories 1,907 1,048 1,523Trade and other receivables 8,087 6,405 5,035Cash and cash equivalents 13,510 9,281 16,086---------------------- --------- --------- --------- 23,504 16,734 22,644---------------------- --------- --------- --------- Total assets 70,256 58,055 62,010---------------------- --------- --------- ---------Liabilities Current liabilitiesBorrowings 2,104 7,385 2,651Trade and other payables 8,977 10,154 8,218Current tax liabilities 187 217 110Provisions 2,321 2,090 2,061---------------------- --------- --------- --------- 13,589 19,846 13,040---------------------- --------- --------- ---------Net current assets / (liabilities) 9,915 (3,112) 9,604---------------------- --------- --------- --------- Non-current liabilities Borrowings 6,662 2,149 6,021Deferred tax liabilities 381 449 354---------------------- --------- --------- --------- 7,043 2,598 6,375---------------------- --------- --------- ---------Net assets 49,624 35,611 42,595---------------------- --------- --------- ---------Shareholders' equity Ordinary shares 18,336 17,856 18,336Investment in own shares (744) (692) (725)Share premium account 37,318 33,527 37,318Exchange reserves (4,055) (4,991) (6,554)Retained earnings (14,918) (17,719) (16,268)---------------------- --------- --------- ---------Total shareholders' equity 35,937 27,981 32,107Minority interests 13,687 7,630 10,488---------------------- --------- --------- ---------Total equity 49,624 35,611 42,595---------------------- --------- --------- --------- FORTUNE OIL PLC Announcement of Interim Results for 6 Months Ended 30 June 2005 GROUP CASH FLOW STATEMENT Restated in Restated in IFRS IFRS 6 months 6 months 12 months ended ended ended 30.6.2005 30.6.2004 31.12.2004Amount in £'000 (Unaudited) (Unaudited) (Audited)-------------------------- --------- --------- --------- Cash flows from operating activities Profit for the year 2,899 2,765 6,221Adjustments for:Share of results of joint ventures (1,336) (1,210) (1,970)Taxation 267 284 423Amortisation and depreciation 1,165 989 2,021(Loss)/profit on disposal of property,plant and equipment 90 (16) 163Interest income (87) (30) (109)Interest expenses 232 299 421 Increase in inventory (268) (42) (570)Increase in trade and otherreceivables (2,440) (2,625) (740)Increase in trade and other payables 238 1,743 263-------------------------- --------- --------- ---------Cash generated from operations 760 2,157 6,123 Interest received 87 30 109Interest paid (232) (299) (421)Taxation paid (198) (220) (514)-------------------------- --------- --------- ---------Net cash from operating activities 417 1,668 5,297 Cash flow from investing activities Dividend received from a joint venture 1,397 - 1,042Payments for property, plant andequipment (4,078) (559) (1,308)Receipt from disposal of property,plant and equipment 6 36 99Acquisition of business/ subsidiaries (3,211) - (1,531)Investment in a joint venture - 7 (370)Repayment from a joint venture 1,512 133 399-------------------------- --------- --------- ---------Total cash flows used in investingactivities (4,374) (383) (1,669)Cash flows from financing activitiesProceeds from issue of share capital - 116 4,514Expenses incurred in conversion ofconvertible note - (128) (255)Loan from minority shareholders 931 866 -Dividend paid to minority shareholders - (3,727) (1,535)Decrease in loans (748) (502) (1,041)-------------------------- --------- --------- ---------Total cash flows from/ (used in)financing activities 183 (3,375) 1,683-------------------------- --------- --------- ---------Net (decrease)/ increase in cash andcash equivalents (3,774) (2,090) 5,311Cash and cash equivalents at beginningof the period / year 16,086 11,548 11,548Effect of foreign exchange ratechanges 1,198 (177) (773)-------------------------- --------- --------- ---------Cash and cash equivalents at end ofthe period / year 13,510 9,281 16,086-------------------------- --------- --------- --------- FORTUNE OIL PLC Announcement of Interim Results for 6 Months Ended 30 June 2005 STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY Amount in £'000 Ordinary Share Investment Exchange Profit and Shares premium account in own shares reserve loss account Total --------------- -------- --------------- ------------- -------- ------------ ------ Balance at 1January 2004 14,272 26,498 (690) (4,572) (18,899) 16,609Issue of sharecapital 3,584 7,029 - - - 10,613Interest income - - (2) - - (2)Currency adjustments - - - (419) - (419)Profit for the period- restated - - - - 1,180 1,180 --------------- -------- --------------- ------------ -------- ------------ ------Balance at 30June 2004 17,856 33,527 (692) (4,991) (17,719) 27,981Issue of sharecapital 480 3,791 - - - 4,271Interest income - - (33) - - (33)Currency adjustments - - - (1,563) - (1,563)Profit for the period - restated - - - - 1,451 1,451--------------- -------- --------------- ------------ -------- ------------ ------Balance at 31December 2004 18,336 37,318 (725) (6,554) (16,268) 32,107Interest income - - (19) - - (19)Currency adjustments - - - 2,499 - 2,499Profit for the period - - - - 1,350 1,350--------------- -------- --------------- ------------ -------- ------------ ------Balance at 30June 2005 18,336 37,318 (744) (4,055) (14,918) 35,937--------------- -------- --------------- ------------ -------- ------------ ------ FORTUNE OIL PLC Announcement of Interim Results for 6 Months Ended 30 June 2005 SEGMENTAL ANALYSIS (a) Class of business Single point mooring facility Aviation Natural Gas ----------------- --------------- -------------6 months ended 30.6 2005 2004 2005 2004 2005 2004Amount in £'000------------------ ------- ------- ------ ------- ------ -----Revenue including share ofjoint ventures 5,731 6,130 38,092 32,261 1,929 1,629 Share of revenue of joint ventures - - (38,092) (32,261) - ------------------- ------- ------- ------ ------- ------ -----Group revenue 5,731 6,130 - - 1,929 1,629------------------ ------- ------- ------ ------- ------ -----Group operating profit 2,970 2,998 - - (224) (114)Share of results of jointventures - - 1,020 928 - ------------------- ------- ------- ------ ------- ------ -----Profit from operations 2,970 2,998 1,020 928 (224) (114)------------------ ------- ------- ------ ------- ------ ----- Oil trading Central & storage* Others** administration Group ------------- ------------- ------------- --------------6 months ended 30.6 2005 2004 2005 2004 2005 2004 2005 2004Amount in £'000 ------------------ ------ ------ ------ ------ ------ ------ ------ ------Revenue including share ofjoint ventures 16,450 16,949 1,978 1,570 - - 64,180 58,539 Share of revenue of joint ventures (477) (406) (1,978) (1,570) - - (40,547) (34,237)------------------ ------ ------ ------ ------ ------ ------ ------ ------Group revenue 15,973 16,543 - - - - 23,633 24,302------------------ ------ ------ ------ ------ ------ ------ ------ ------Group operating profit (475) (455) - - (296) (321) 1,975 2,108Share of results of joint ventures 264 211 52 71 - - 1,336 1,210------------------ ------ ------ ------ ------ ------ ------ ------ ------Profit from operations (211) (244) 52 71 (296) (321) 3,311 3,318Interest payable (232) (299)Interest receivable 87 30------------------ ------ ------Profit before taxation 3,166 3,049Taxation (267) (284)------------------ ------ ------Profit for the period 2,899 2,765------------------ ------ ------Attributable toEquity shareholders 1,350 1,180Minority interests 1,549 1,585------------------ ------ ------ * Included overheads in Hong Kong/PRC offices. ** Others includes distribution. b) Geographical operationsWith the exception of operating loss of £262,000 (2004: £295,000) in respect ofcentral administration in the United Kingdom, all of the Group's activities arecarried out in China and Hong Kong. FORTUNE OIL PLC Announcement of Interim Results for 6 Months Ended 30 June 2005 NOTES 1. INTRODUCTION Fortune Oil PLC prepared its consolidated financial statements under UKGenerally Accepted Accounting Practice (UKGAAP) until 31 December 2004. From 1January 2005, the Group will prepare its consolidated financial statements inaccordance with International Financial Reporting Standards (IFRS) as adoptedfor use in the EU. Fortune's results for the six months to 30 June 2005 are the first results to bereported under IFRS and the results to 31 December 2005 will be the first fullyear to be reported under IFRS. The Group's date of transition to IFRS is 1January 2004, i.e. the beginning of the comparative year ended 31 December 2004.The Group's IFRS adoption date is 1 January 2005. These results for the six months ended 30 June 2005 include comparativeinformation for the period ended 30 June 2004 and year ended 31 December 2004,together with the information and reconciliation between UKGAAP and IFRSrequired under IFRS 1, including: * Summary of basis of preparation of IFRS information* Significant Accounting policies Fortune has adopted under IFRS* Income Statement, Balance Sheet, Changes in Shareholders Equity and Cash Flow Statement for the six months ended 30 June 2004* Income Statement, Balance Sheet, Changes in Shareholders Equity and Cash Flow Statement for the year ended 31 December 2004* Income Statement, Balance Sheet, Changes in Shareholders Equity and Cash Flow Statement for the six months ended 30 June 2005* Reconciliation between UKGAAP and IFRS The half-year results were neither audited nor reviewed by the auditors. Thefull year figures for 2004 do not constitute statutory accounts for the purposesof section 240 of the Companies Act 1985. A copy of the statutory accounts forthat year under UK Generally Accepted Accounting Practice (UK GAAP) and uponwhich the auditors issued an unqualified opinion, have been delivered to theRegistrar of Companies. 2. BASIS OF PREPARATION OF IFRS INFORMATION The financial information has been prepared in accordance with those IFRSstandards and IFRIC interpretations issued and effective as at the time ofpreparing these statements. IFRS is subject to amendment and interpretation bythe International Accounting Standards Board (IASB) and there is an on-goingprocess of review and endorsement by the European Commission. The financialinformation has also been prepared using the guidance contained in IAS34(Interim Financial Reporting) and IFRS1 (First Time Adoption of IFRS) asconsidered appropriate to the circumstances of the Group. In preparing this reconciliation in accordance with IFRS 1, the Group hasapplied the mandatory exceptions and certain of the optional exemptions fromfull retrospective application of IFRS. As noted in last years report and accounts one potential conversion impactidentified during the initial review of the implications of the conversion toIFRS was that MKM was consolidated as a subsidiary under UK GAAP on the groundsof 'dominant influence'. However, under IFRS the control factor will have to beincorporated into the underlying agreements. In agreement with all relevantshareholding parties MKM has started the process of effecting such requiredamendments to the joint venture agreement. It is expected that MKM will be afully controlled entity under IFRS by the year-end. On this basis, the Directorsconsider it appropriate to continue to record MKM as a subsidiary in the interimaccounts. Exemptions from full retrospective application elected by the Group. The Group has made the following choices in respect of the optional exemptionsfrom full retrospective application, as set out in IFRS 1. (a) Business combinations The Group has applied the business combinations exemption in IFRS 1. It has not restated business combinations that took place prior to the 1 January 2004 transition date. (b) Cumulative translation differences exemption The Group has applied the cumulative translation differences exemption to all subsidiaries, joint ventures and associated companies. The Group has chosen to continue to classify exchange reserves as a separate component of equity. The following optional exemptions from full retrospective application have notbeen made as they are either not applicable or management have chosen not toapply the exemption: (a) Fair value as deemed cost exemption(b) Employee benefits exemption(c) Compound financial instruments exemption(d) Assets and liabilities of subsidiaries, associates and joint ventures exemption(e) Exemption from restatement of comparatives for IAS 32 and IAS 39.(f) Designation of financial assets and financial liabilities exemption(g) Share based payment exemption(h) Insurance contracts exemption(i) Decommissioning liabilities included in the cost of property, plant and equipment exemption(j) Fair value measurement of financial assets and liabilities at initial recognition The Group has made the following choices in respect of the mandatory exceptionsfrom retrospective application, as set out in IFRS: (a) Estimates under IFRS at 1 January 2004 should be consistent with estimates made for the same data under previous GAAP unless there is evidence that those estimates were in error. (b) Assets held for sale and discontinued operations exception. Management applies IFRS 5 prospectively from 1 January 2005. Any assets held forsale or discontinued operations are recognised in accordance with IFRS 5 onlyfrom 1 January 2005. The group did not have any assets that met theheld-for-sale criteria during the period presented. No adjustment was required. The following mandatory exceptions to retrospective application have not beenapplied as they are not applicable to the Group: (a) Derecognition of financial assets and liabilities exception (b) Hedge accounting exception. The Group has neither available-for-sale investments nor financial assets atfair value through profit and loss under IAS 32. 3. SIGNIFICANT ACCOUNTING POLICIES Basis of accounting The financial statements are prepared on a going concern basis in accordancewith applicable accounting standards under the historical cost convention. Basis of consolidation The Group financial statements consolidate the financial statements of theCompany and its subsidiary undertakings and include the attributable share ofthe results and net assets of subsidiary undertakings and joint ventures. Theresults and net assets of undertakings acquired or disposed of during afinancial year are included in the Group income statement and balance sheet fromthe effective date of acquisition or to the effective date of disposal.Subsidiary undertakings have been consolidated using the purchase method ofaccounting and joint ventures and associated undertakings are included inaccordance with the accounting policies noted below. Investments in the PRC In respect of major infrastructure projects, the Group's investment in anundertaking in the PRC (People's Republic of China) is made with one or moreother parties under a "joint venture" arrangement, with the parties involvedtaking an agreed interest in the issued share capital of the undertaking. Thearrangement is intended to provide necessary financial and operational supportto the project as well as providing strong local connections and typically anarrangement will include at least one representative from the PRC. Thearrangement is supported by a "joint venture agreement" between the parties thatspecifies the terms of the arrangement, including details regarding thestructure and composition of the board of directors and practical workingarrangements. The amount of equity interest and the terms of the joint ventureagreement will generally determine whether the investment is recorded as asubsidiary, joint venture or associate, primarily based on the control of theboard and the ability to control the strategic financial and operating policiesof the undertaking. Subsidiary undertakings The Group's interest in subsidiary undertakings comprises investments inundertakings where the Group holds in excess of 50 per cent of the issued sharecapital of the undertaking and where the Group controls the strategic, financialand operating policies of the undertaking concerned either through voting rightsunder the terms of the joint venture agreement or where the board considers thatthe Group exercises control over the financial and operating policies of theundertaking. Joint ventures The Group's interests in joint ventures comprise investments in undertakingswhere the Group normally holds between 20 per cent and 50 per cent of the issuedcapital of the undertaking and where the Group shares in the control of thestrategic financial and operating policies of the undertaking concerned byagreement but does not exercise the level of control for the undertaking to beregarded as a subsidiary. Joint ventures are accounted for using the equitymethod of accounting. Associated undertakings The Group's interests in joint ventures comprise investments in undertakingswhere the Group normally holds between 20 per cent and 50 per cent of the issuedcapital of the undertaking and where the Group shares in the control of thestrategic financial and operating policies of the undertaking concerned but doesnot reach the level of shared control required to be accounted for as a jointventure. Associates are accounted for using the equity method of accounting. Goodwill Goodwill is the difference between the amount paid on the acquisition of abusiness, be it subsidiary, joint venture or associate and the aggregate fairvalue of its separable net assets. Positive goodwill, where treated as an asset,is not amortised but subject to annual or periodical review for impairment whenidentified. Any such write down would be charged to operating profit. Other intangible assets Other intangible assets comprise land use rights and are stated at cost lessaccumulated amortisation. Land use rights are amortised on a straight-line basisover 18 years or the term of the contact, whichever is shorter. Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation.Where there is evidence of impairment, fixed assets are written down torecoverable amount. Any such write down would be charged to operating profit.Property, plant and equipment are depreciated on a straight-line basis overtheir expected useful lives as follows : Motor vehicles, fixtures and fittings 3 to 6 yearsSingle point mooring buoy andrelated equipment 6 to 18 years (over the term of the contract)Leasehold property/Improvements over the leasehold periodLPG tanks and facilities 20 yearsStorage tanks and jetty 3 to 38 yearsPipelines 20 to 30 years (over the term of the contract) Inventory Stocks, including stocks of gas and oil, are valued at the lower of cost and netrealisable value. Deferred taxation Deferred tax is provided on timing differences that have arisen but not reversedby the balance sheet date, where the timing differences result in an obligationto pay more tax, or a right to pay less tax, in the future. Timing differencesarise because of differences between the treatment of certain items foraccounting and taxation purposes. Deferred tax assets are recognised to the extent that it is regarded as morelikely than not that they will be recovered. Deferred tax is measured at the taxrates that are expected to apply in the periods when the timing differences areexpected to reverse, based on tax rates and law enacted or substantively enactedat the balance sheet date. Deferred tax assets and liabilities are notdiscounted. Where law or accounting standards require gains and losses to berecognised in the statement of total recognised gains and losses, the relatedtaxation is also taken directly to the statement of total recognised gains andlosses in due course. Foreign currencies Assets and liabilities in foreign currencies are translated into sterling at therate of exchange ruling at the balance sheet date. Exchange differences arisingfrom the treatment of the net investment in overseas subsidiaries, jointventures and associates and related foreign currency loans are taken directly toreserves. The trading results of foreign subsidiaries, joint ventures andassociates are translated into sterling using the average exchange rate duringthe year, and the difference in relation to closing rates is taken to reserves.All other currency differences are taken to the profit and loss account. Revenue Revenue consists of the invoiced value, excluding local taxes for goods andservices supplied to third parties and sundry income. In respect of oil tradingtransactions where the Group does not act as the principal contractor then onlythe management fees and commission are recognised. Leased assets Annual rentals under operating leases are charged to the profit and loss accounton a straight-line basis over the lease term. Pensions The Group does not operate any pension schemes that carry obligations similar todefined benefit arrangements. Contributions to social benefits for employees arecharged to profit as incurred. Impairment of assets An impairment test is performed whenever events and circumstances arising duringthe period under review indicate that the carrying value of an asset may exceedits recoverable amount. The carrying value is compared against the expected recoverable amount of theasset, generally by reference to the present value of the future net cash flowsexpected to be derived from that asset. The cash generating unit applied forimpairment test purposes is generally the field, except that a number of fieldinterests may be grouped as a single cash generating unit where the cash flowsof each field are interdependent 4. Dividends were not paid in any of the periods reported upon and no dividendis proposed. 5. Earnings per share has been calculated by dividing earnings attributable tothe shareholders by the weighted average number of shares in issue during therespective periods, as indicated below: 30.6.05 30.6.04 31.12.04 '000 £'000 '000 £'000 '000 £'000------------- -------- ------- -------- ------- -------- -------Basic 1,773,586 1,350 1,434,826 1,180 1,583,164 2,631Share optionadjustment 9,252 - - - 9,296 -------------- -------- ------- -------- ------- -------- -------Diluted 1,782,838 1,350 1,434,826 1,180 1,592,460 2,631------------- -------- ------- -------- ------- -------- ------- 6. EXPLANATION OF THE ADJUSTMENTS FROM UK GAAP TO IFRS * No adjustments were required to be made between equity (group net assets) at 1 January 2004 as reported under UK GAAP and as reported under IFRS. * Under IFRS, the directors consider it appropriate to include headings on the income statement to show revenue including share of joint ventures as previously reported under UKGAAP * Interests in associates and joint venture entities are accounted for using the equity method under UK GAAP and IFRS. Under UK GAAP, the Group's share of their operating profits, interest and taxation were included under those respective captions in the income statement. Under IFRS, the Group's share of the profits of joint ventures and associates are disclosed in a single line within "Share of results of Joint Ventures". * Debtors due after one year, included within current assets under UK GAAP, are reclassified within "Non-current assets" under IFRS as "Other receivable" financial assets. * Under UKGAAP, goodwill was amortised on a straight-line basis over its economic useful life of up to 20 years, tested for impairment and provided for as necessary. Under IFRS, goodwill is no longer amortised but is carried at cost and is subject to annual review. Amortisation charged in the periods to 30 June 2004 and 31 December 2004 has been written back as a result. * Land use rights are reclassified as other intangible assets under IFRS. * Under IFRS 1, "First-time adoption of IFRS", the Group has adopted IAS 32 and IAS 39 "Financial Instruments" prospectively from 1 January 2005, and there was no significant impact. 7. RECONCILIATION OF GROUP INCOME STATEMENT TO IFRS Group income statement UK GAAP JV's taxFor the period ended 30 June 2004 as previously andAmount in £'000 reported Interest interest--------------------- --------- -------- -------- Turnover: group and shareof joint ventures 58,539 Less: share of jointventures' turnover (34,237)-------------------- --------- -------- --------Turnover 24,302 - -Cost of sales (20,092)-------------------- --------- -------- --------Gross profit 4,210 - -Exceptional administrative expenses - - -Other administrative expenses (2,128) - --------------------- --------- -------- --------Total administrative expenses (2,128) - --------------------- --------- -------- --------Group operating profit / (loss) 2,082 - -Share of operating profit inJoint ventures 1,535 - (325)Associates - - --------------------- --------- -------- -------- 3,617 - (325) (299) - 30 - --------- -------- -------- Total operating profit / (loss) 3,617 (269) (325)Net interest payableGroup (269) 269 -Share of joint ventures (215) - 215-------------------- --------- -------- --------Profit on ordinaryactivities before taxation 3,133 - (110)Tax on profit on ordinary activitiesGroup (284) - -Share of joint ventures (110) - 110-------------------- --------- -------- --------Profit on ordinaryactivities after taxation 2,739 - -Equity minority interests (1,585) ---------Retained profit for the year 1,154 --------- -------------------- --------- -------- -------- 7. RECONCILIATION OF GROUP INCOME STATEMENT TO IFRS (CONT.) Group income statement UK GAAPFor the period ended 30 June 2004 in IFRS GoodwillAmount in £'000 format amortisation IFRS-------------------- ------- ------------ ------ ----------------------------------------- Turnover: group and shareof joint ventures 58,539 - 58,539 Revenue including share of joint ventures of joint ventures Less: share of jointventures' turnover (34,237) - (34,237) Share of revenue of joint ventures------------------ ------- ---------- ------- -----------------------------------------Turnover 24,302 - 24,302 RevenueCost of sales (20,092) - (20,092) Cost of sales------------------ ------- ---------- ------- -----------------------------------------Gross profit 4,210 - 4,210 Gross profit Exceptional administrative expenses - - - Exceptional itemsOther administrative expenses (2,128) 26 (2,102) Administrative expenses------------------ ------- ---------- ------- -----------------------------------------Total administrative expenses (2,128) 26 (2,102)------------------ ------- ---------- ------- -----------------------------------------Group operating profit / (loss) 2,082 26 2,108 Operating profitShare of operating profit in Joint ventures 1,210 - 1,210 Share of results of joint ventures Associates - - ------------------- ------- ---------- ------- ----------------------------------------- 3,292 26 3,318 Profit from operations (299) - (299) Interest payable 30 - 30 Interest receivable------------------ ------- ---------- ------- -----------------------------------------Total operating profit / (loss) 3,023 26 3,049Net interest payable Group - - - Share of joint ventures - - - ------- ---------- ------- -----------------------------------------------------------Profit on ordinary activities before taxation 3,023 26 3,049 Profit before taxation Tax on profit onordinary activities Group (284) - (284) Taxation Share of joint ventures - - - ------- ---------- ------- -----------------------------------------------------------Profit on ordinary activitiesafter taxation 2,739 26 2,765 Profit for the period ------- -------Equity minority interestsRetained profit for the year Attributable to: 1,154 26 1,180 Equity shareholders 1,585 - 1,585 Minority interest ------- ------- 2,739 2,765 ------- ------------------------- ------- ---------- ------- ----------------------------------------- 7. RECONCILIATION OF GROUP INCOME STATEMENT TO IFRS (CONT.) Group income statement UK GAAP JV's taxFor the period ended 31 December 2004 as previously andAmount in £'000 reported Interest interest--------------------- --------- -------- -------- Turnover: group and shareof joint ventures 118,088Less: share of jointventures' turnover (73,319)-------------------- --------- -------- --------Turnover 44,769 - -Cost of sales (36,775)-------------------- --------- -------- --------Gross profit 7,994 - -Exceptional administrative expenses 801 - -Other administrative expenses (3,861) - --------------------- --------- -------- --------Total administrative expenses (3,060) - --------------------- --------- -------- --------Group operating profit / (loss) 4,934 - -Share of operating profit in Joint ventures 2,500 - (530) Associates - - --------------------- --------- -------- -------- 7,434 - (530) (421) - 109 --------------------- --------- -------- -------- Total operating profit / (loss) 7,434 (312) (530)Net interest payable Group (312) 312 - Share of joint ventures 305) - 305-------------------- --------- -------- --------Profit on ordinaryactivities before taxation 6,817 - (225) Tax on profit on ordinary activities Group (423) - - Share of joint ventures (225) - 225-------------------- --------- -------- --------Profit on ordinaryactivities after taxation 6,169 - -Equity minority interests (3,590) ---------Retained profit for the year 2,579 --------- -------------------- --------- -------- -------- 7. RECONCILIATION OF GROUP INCOME STATEMENT TO IFRS (CONT.) Group income statement UK GAAPFor the period ended 31 December 2004 in IFRS GoodwillAmount in £'000 format amortisation IFRS-------------------- ------- ------------ ------ ----------------------------------------- Turnover:group and share of joint ventures 118,088 - 118,088 Revenue including share of joint ventures Less: share of jointventures' turnover (73,319) - (73,319) Share of revenue of joint ventures------------------ ------- ---------- ------- -----------------------------------------Turnover 44,769 - 44,769 RevenueCost of sales (36,775) - (36,775) Cost of sales------------------ ------- ---------- ------- -----------------------------------------Gross profit 7,994 - 7,994 Gross profitExceptional administrative expenses 801 - 801 Exceptional itemsOther administrative expenses (3,861) 52 (3,809) Administrative expenses------------------ ------- ---------- ------- -----------------------------------------Total administrative expenses (3,060) 52 (3,008)------------------ ------- ---------- ------- -----------------------------------------Group operating profit / (loss) 4,934 52 4,986 Operating profitShare of operating profit in Joint ventures 1,970 - 1,970 Share of results of joint ventures Associates - - ------------------- ------- ---------- ------- ----------------------------------------- 6,904 52 6,956 Profit from operations (421) - (421) Interest payable 109 - 109 Interest receivable------------------ ------- ---------- ------- ----------------------------------------- Total operating profit / (loss) 6,592 52 6,644Net interest payable Group - - - Share of joint ventures - - ------------------- ------- ---------- ------- -----------------------------------------Profit on ordinaryactivities before taxation 6,592 52 6,644 Profit before taxation Tax on profit onordinary activities Group (423) - (423) Taxation Share of joint ventures - - ------------------- ------- ---------- ------- -----------------------------------------Profit on ordinaryactivities after taxation 6,169 52 6,221 Profit for the period ------- -------Equity minority interestsRetained profit for the year Attributable to: 2,579 52 2,631 Equity shareholders 3,590 - 3,590 Minority interest ------- ------- 6,169 6,221 ------- ------------------------- ------- ---------- ------- ----------------------------------------- 8. RECONCILIATION OF GROUP BALANCE SHEET TO IFRS Groupbalance sheetat 30 June 2004 UK GAAP as Investment Deferred previously in own taxAmount in £'000 reported Debtors Creditors shares liabilities------------------------ --------- -------- --------- --------- ----------- Fixed assetsTangible assets 18,992 - -Intangible assets 993 - - - - - - -Investment injoint ventures 18,024 - - - - Other investments 819 - - (692) - - 3,159 - - ------------------------- --------- -------- -------- --------- -------- 38,828 3,159 - (692) ------------------------- --------- -------- -------- --------- --------Current assetsStock 1,048 - - - -Debtors:Amounts fallingdue after morethan one year 3,159 (3,159) - - -Debtors:Amounts fallingdue within one year 6,405 - - - -Cash at bank andin hand 9,281 - - - ------------------------- --------- -------- -------- --------- -------- 19,893 (3,159) - - - Creditors:Amounts fallingdue within one year (19,846) - 12,461 - - - - (10,154) - - - - (217) - - - - (2,090) - ------------------------- --------- -------- -------- --------- --------Net current assets/ (liabilities) 47 (3,159) - - -Total assets lesscurrent liabilities 38,875 - - (692) - Creditors:Amounts fallingdue after morethan one year (2,598) - - - 449Provision forliabilities and charges - - - - (449)------------------------ --------- -------- -------- --------- --------Net assets 36,277 - - (692) ------------------------- --------- -------- -------- --------- -------- Capital and reservesCalled up sharecapital 17,856 - - - -Investment in own shares - - - (692) -Share premium account 33,527 - - - -Exchange reserves (4,991) - - - -Profit and loss account (17,745) - - - ------------------------- --------- -------- -------- --------- --------Equity shareholders' funds 28,647 - - (692) -Equity minority interests 7,630 - - - ------------------------- --------- -------- -------- --------- -------- 36,277 - - (692) ------------------------- --------- -------- -------- --------- -------- 8. RECONCILIATION OF GROUP BALANCE SHEET TO IFRS (CONT.) Group balance sheet Other UKGAAPat 30 June 2004 intangible in IFRS GoodwillAmount in £'000 assets format amortisation IFRS------------------- -------- -------- --------- ----- ------------------------------ Fixed assets Non-current assetsTangible assets (1,041) 17,951 - 17,951 Property, plant and equipment Intangible assets - 993 26 1,019 Goodwill 1,041 1,041 - 1,041 Other intangible assetsInvestment injoint ventures - 18,024 - 18,024 Investments in joint ventures Other investments - 127 - 127 Other investment - 3,159 - 3,159 Other receivable------------------- -------- -------- --------- ----- ------------------------------ - 41,295 26 41,321------------------- -------- -------- --------- ----- ------------------------------Current assets Current assetsStock - 1,048 - 1,048 InventoryDebtors: Amounts falling due aftermore than one year - - - - Debtors:Amounts falling duewithin one year - 6,405 - 6,405 Trade and other receivablesCash at bankand in hand - 9,281 - 9,281 Cash and cash equivalents------------------- -------- -------- --------- ----- ------------------------------ - 16,734 - 16,734 Current liabilitiesCreditors:Amounts falling duewithin one year - (7,385) - (7,385) Borrowings - (10,154) - (10,154) Trade and other payables - (217) - (217) Current tax liabilities - (2,090) - (2,090) Provisions------------------- -------- -------- --------- ----- ------------------------------Net currentassets / (liabilities) - (3,112) - (3,112) Net current assets / (liabilities) Total assetsless currentliabilities - 38,183 26 38,209 Total assets less current liabilities Non-current liabilitiesCreditors:Amounts falling dueafter more than one year - (2,149) - (2,149) BorrowingsProvision forliabilities and charges - (449) - (449) Deferred tax liabilities------------------- -------- -------- --------- ----- ------------------------------Net assets - 35,585 26 35,611 Net assets------------------- -------- -------- --------- ----- ------------------------------ Capital and reserves Equity Called up share capital - 17,856 - 17,856 Ordinary sharesInvestment in own shares - (692) - (692) Investment in own sharesShare premium account - 33,527 - 33,527 Share premium accountExchange reserves - (4,991) - (4,991) Exchange reservesProfit and loss account - (17,745) 26 (17,719) Profit and loss account------------------- -------- -------- --------- ----- ------------------------------Equity shareholders'funds - 27,955 26 27,981 Total equity shareholders' funds Equity minority interests 7,630 - 7,630 Minority interest------------------- -------- -------- --------- ----- ------------------------------ - 35,585 26 35,611 Total equity------------------- -------- -------- --------- ----- ------------------------------ 8. RECONCILIATION OF GROUP BALANCE SHEET TO IFRS (CONT.) Groupbalance sheetat 31 December 2004 UK GAAP as Investment Deferred previously in own taxAmount in £'000 reported Debtors Creditors shares liabilities------------------------ --------- -------- --------- --------- ----------- Fixed assetsTangible assets 19,090 - -Intangible assets 916 - - - - - - -Investment injoint ventures 16,908 - - - - Other investments 121 - - - - - 2,279 - - ------------------------- --------- -------- -------- --------- -------- 37,035 2,279 - - ------------------------- --------- -------- -------- --------- --------Current assetsStock 1,523 - - - -Debtors:Amounts fallingdue after morethan one year 2,279 (2,279) - - -Debtors:Amounts fallingdue within one year 5,035 - - - -Cash at bank and in hand 16,086 - - - ------------------------- --------- -------- -------- --------- -------- 24,923 (2,279) - - - Creditors:Amounts fallingdue within one year (13,040) - 10,389 - - - - (8,218) - - - - (110) - - - - (2,061) - ------------------------- --------- -------- -------- --------- --------Net current assets/ (liabilities) 11,883 (2,279) - - -Total assets lesscurrent liabilities 48,918 - - - - Creditors:Amounts fallingdue after morethan one year (6,021) - - - -Provision forliabilities and charges (354) - - - ------------------------- --------- -------- -------- --------- --------Net assets 42,543 - - - ------------------------- --------- -------- -------- --------- -------- Capital and reservesCalled up share capital 18,336 - - - -Investment in own shares (725) - - - -Share premium account 37,318 - - - -Exchange reserves (6,554) - - - -Profit and loss account (16,320) - - - ------------------------- --------- -------- -------- --------- --------Equity shareholders' funds 32,055 - - - -Equity minority interests 10,488 - - - ------------------------- --------- -------- -------- --------- -------- 42,543 - - - ------------------------- --------- -------- -------- --------- -------- 8. RECONCILIATION OF GROUP BALANCE SHEET TO IFRS (CONT.) Groupbalance sheet Other UKGAAPat 30 June 2004 intangible in IFRS GoodwillAmount in £'000 assets format amortisation IFRS------------------- -------- -------- --------- ----- ------------------------------ Fixed assets Non-current assetsTangible assets (947) 18,143 - 18,143 Property, plant and equipmentIntangible assets - 916 52 968 Goodwill 947 947 - 947 Other intangible assetsInvestment injoint ventures - 16,908 - 16,908 Investments in joint ventures Other investments - 121 - 121 Other investment - 2,279 - 2,279 Other receivable------------------- -------- -------- --------- ----- ------------------------------ - 39,314 52 39,366------------------- -------- -------- --------- ----- ------------------------------Current assets Current assetsStock - 1,523 - 1,523 InventoryDebtors: Amounts falling due aftermore than one year - - - - Debtors:Amounts falling duewithin one year - 5,035 - 5,035 Trade and other receivablesCash at bankand in hand - 16,086 - 16,086 Cash and cash equivalents------------------- -------- -------- --------- ----- ------------------------------ - 22,644 - 22,644 Current liabilities Creditors:Amounts falling duewithin one year - (2,651) - (2,651) Borrowings - (8,218) - (8,218) Trade and other payables - (110) - (110) Current tax liabilities - (2,061) - (2,061) Provisions------------------- -------- -------- --------- ----- ------------------------------Net currentassets / (liabilities) - 9,604 - 9,604 Net current assets / (liabilities) Total assetsless currentliabilities - 48,918 52 48,970 Total assets less current liabilities Non-current liabilities Creditors:Amounts falling dueafter more than one year - (6,021) - (6,021) BorrowingsProvision forliabilities and charges - (354) - (354) Deferred tax liabilities------------------- -------- -------- --------- ----- ------------------------------Net assets - 42,543 52 42,595 Net assets------------------- -------- -------- --------- ----- ------------------------------ Capital and reserves EquityCalled up share capital - 18,336 - 18,336 Ordinary sharesInvestment in own shares - (725) - (725) Investment in own sharesShare premium account - 37,318 - 37,318 Share premium accountExchange reserves - (6,554) - (6,554) Exchange reservesProfit and loss account - (16,320) 52 (16,268) Profit and loss account------------------- -------- -------- --------- ----- ------------------------------Equity shareholders' funds - 32,055 52 32,107 Total equity shareholders' fundsEquity minority interests 10,488 - 10,488 Minority interest------------------- -------- -------- --------- ----- ------------------------------ - 42,543 52 42,595 Total equity------------------- -------- -------- --------- ----- ------------------------------ 9. This report will be sent to all shareholders. Further copies areavailable from the Group's Registered Office, 6/F, Belgrave House 76 BuckinghamPalace Road, London SW1W 9TQ, United Kingdom. This information is provided by RNS The company news service from the London Stock Exchange